Microsoft to start manufacturing phones?

Zu-ne. verb. 1. To fuck over or generally bugger up partners who believed your shite for years and invested heavily in it. (From Zune, noun, a music player released by Microsoft which is incompatible with their previous music sales efforts under the PlaysForSure brand and immediately began to undermine their own branding and hurt their partners).

If you’re currently a vendor of phone handsets using the Windows Mobile operating system, you’re about to get Zuned.

Microsoft has just acquired Danger, makers of the consumer smartphones, the Sidekick. They’re reportedly buying Sidekick to keep it out of Google’s hands as well as to line it up against Research in Motion’s Blackberry and Google’s Android, not to mention Apple’s hit iPhone (which recently garnered 23% of the smartphone market). The Sidekick, although popular, does not run Windows Mobile.

What does this mean to any manufacturer currently using Windows Mobile? Well, if Microsoft is getting into the hardware game for phones then you can expect to have a rough time. This is bad news for beleaguered handset maker, Palm and possibly even worse news for Sony-Ericsson. Palm is floundering after dividing it’s market offering Palm OS and Windows Mobile based handhelds rather than concentrating on developing a decent successor to Palm OS (and what the hell did they do with everything they got from their acquisition of Be?). But there’s more.

After Nokia started road-testing it’s new Linux-based platform in the 770/N800/N810 series of handhelds, Sony-Ericsson knew that it’s use of Symbian as an OS for their phones would leave it in the doldrums in terms of features and development speed. Their solution was the opposite of Nokia’s and they decided to license Windows Mobile.

Boo. Bad mistake.

If Microsoft starts manufacturing their own hardware running their own operating system, where does that leave everyone else who’s investing in Microsoft’s operating systems?

Exactly. Without a paddle.

Don’t believe me? Wikipedia speaks!

During its launch week, the original Zune, now Zune 30, was the second-most-sold portable media device with a 9 % unit share; behind the market-leading iPod’s 63 %. For the first 6 months after launch, NPD Group figures show that the Zune 30 achieved approximately 10% market share in the Hard Drive based MP3 market and 3% in the overall MP3 player market.

Good for Microsoft. $100 million spent on marketing for a 3% market share in the US and 0% outside the US. But that 3% comes at a cost – that’s a few million sales for Microsoft’s previous PlaysForSure partners. Microsoft robbed their hardware partners of those sales and then proceeded to screw over anyone who opened a PlaysForSure store because it didn’t play anything from Napster, Rhapsody, Yahoo Music, or even their own MSN Music Service.

So, what’s the chance they’ll sacrifice their own hardware sales to enable licensees to make a buck?